Although Certificate of Entitlement (COE) premiums under Category A, for cars with engine capacities up to 1,600cc and power outputs lesser than 130bhp, currently cost as much as premiums for bigger cars. The Business Times, reported the appeal for smaller cars is wider, thanks to the attraction of some luxury models.

At the end of the last bidding session, some two weeks ago, premiums for Cat A and Cat B ended at $71,564 and $75,300 respectively. And the local business daily predicts the figures to rise between $3,000 to $5,000 for Cat A, while Cat B could climb by a couple of thousand dollars - after today's COE tender exercise.

Strengthening this claim was a General Manager of a mid-sized dealership who told The Business Times that several marques received an adequate number of orders, in the last two weeks, for cars which fall under Cat A. 

He also claimed there is a higher interest for cars in Cat A than B, which resulted in Cat A premiums not falling after all. This could lead to the government to seek other solutions to soften Cat A premiums.

Today's COE bidding exercise is the second after tweaks were implemented to the COE system. The tweak was supposed to refrain luxury models like Mercedes-Benz, BMW or Audi, among others, out of Cat A - once considered the traditional bread and butter segment.

Still, Mercedes and Audi have managed to retain several models like the CLA180, A180 and B180 from Mercedes and among others, the all new A3 Sedan from Audi.

The CLA180 has the same 1.6-litre turbocharged power unit as last year's best selling CLA200, but the power has been detuned to 122bhp from 156bhp - qualifying for Cat A. Meanwhile, the A3 Sedan is the first A3 model to adopt the saloon bodystyle and houses a 1.4-litre turbocharged engine rated at 122bhp.

Despite prices ranging from $148,000 to $180,000, the General Manager believes higher profit margins of premium marques, in comparison to mass market brands, make it difficult to outbid the former for COEs.

In contrast, a Sales Director of a rival brand claimed the two German automakers are doing well because their products are desirable. He explained to the local business daily, "When people heard that Mercedes has three models in Cat A even after the changes, that triggered a lot of interest. And this is the first time Audi is offering a small sedan. So all these things excite the market."

However, he believes as an increasing number of models will be moved into Cat B after the recategorisation, premiums for Cat B is unlikely to soften.